TML's rating, which includes a one-notch uplift from its standalone rating of 'BB' on its linkage with Tata Sons (TSOL), reflects its leading position in India's commercial-vehicle market and the passenger-vehicle business, which is recovering after the success of new product launches in recent years.

TML's rating also reflects its 100%-owned subsidiary Jaguar Land Rover Automotive plc's (JLR, BB+/Stable) strong positioning in the premium segment and a financial profile that will remain solid even after considering substantial investments for capacity expansion and new technologies over the next few years. JLR's EBITDA accounted for more than 85% of TML's consolidated EBITDA in the fiscal year ended 31 March 2017 (FY17).

The Stable Outlook reflects Fitch's expectations of gradually improving profitability and strong financial flexibility, which will help to meet significant investment requirements, especially in the JLR business, without any liquidity concerns and support TML's leverage at a level commensurate with the current rating.

Shares of the company gained Rs 2.55, or 0.77%, to trade at Rs 332.85. The total volume of shares traded was 233,443 at the BSE (12.07 p.m., Friday).